Freeland promises Canada will ‘build big things here,’ but will we really?

TORONTO—In her budget 2023, Finance Minister Chrystia Freeland boasts: “we’re going to build big things here in Canada.” In her long budget document, she proclaims: “this is a country of big ideas, big opportunities, and hardworking people who can do big things.” Historically, we have done big things, and could do so again. But will we? Freeland plans to give business much money to build the big things. But who actually will own the new, big things to be built in Canada? Whose big new ideas will be used? Who will profit from the big, new opportunities? Will Canadians be more than employees of foreign multinationals, which will capture the profits from the nearly $100-billion in new incentives in budget 2023, on top of the $120-billion in federal commitments since 2016? Or will we create a new Canadian economy based on innovative Canadian companies supplying the world with new products and services and using the wealth generated to help build an even more prosperous nation? Will we capture or miss a great opportunity to build a stronger home-grown economy, based on Canadian enterprise and ideas? Not surprisingly, this year's federal budget fails to show how its massive new supports for corporations will improve Canada’s overall economic growth prospects, or how it will address the low research and development investment by corporations in Canada, or what impact—if any—its measures will have on improving Canada's dismal productivity performance and our pitiful potential growth rate. From 2022-2027, economic growth is forecast to average just two per cent a year, too low to generate the wealth we need for the kind of society to which we aspire. Such economic growth means we will continue to be unable to do all the things we want to do, and why public debt continues to grow. There is no broad innovation strategy in the federal government's budget for 2023, and many promising areas are neglected. For example, while research funding for innovation in health has given us longer and healthier lives, Freeland ignores the strong effort by the health science community for a boost to long-neglected health research budgets. If it’s not clean-tech, forget it. The budget is loaded with tax incentives and subsidies to underwrite corporate investment in clean technologies. “The goal of these investments,” Budget 2023 says, “is to grow Canada’s economic capacity in the industries of the future, create good careers, and usher in a new generation of prosperity for all Canadians, while simultaneously reducing Canada’s emissions and strengthening our essential trading relationships.” But will they? And what kind of economy is the Trudeau government trying to create: a branch-plant economy where most of the major projects, and major companies, are branches of foreign corporations, or a future Canadian economy with strong Canadian-owned and controlled corporations that create wealth for Canadians and provide greater economic independence? We need both kinds of investment, but the federal budget reinforces the trend in which we become largely a branch-plant economy without the new generation of larger Canadian companies we need as well. There is little that suggests a focus and goal to ensure that a good share all of this projected investment—and the tens of billions of dollars being promised through rich tax incentives and generous subsidies—to develop the “industries of tomorrow” will result in the growth of Canadian-owned companies. So far, for example, the bulk of the public investment in clean energy and clean technology projects through the federal Strategic Innovation Fund has gone to foreign corporations rather than to helping build a future economy based on Canadian corporations. Core technologies for the LNG Canada plant, with $220-million of federal support, on the British Columbia Coast are being imported in a project led by Shell with Korean, Japanese and Chinese partners, and the same will be true for the first green hydrogen plant in Newfoundland, as will the core technologies for the two electric vehicle battery plants to be built in Canada. These projects are heavily supported by taxpayers and will be even more so as a result of Budget 2023 through direct subsidies, generous and refundable investment tax credits, and a special low profits tax on the projects. Budget 2023 says there should be spillover effects from major investments in clean technologies. But if the major procurement decisions are being made at head offices in other countries, there is a good chance those spillover benefits will accrue to their own home-country suppliers, unless Canada gets serious about domestic content. To be sure, foreign multinationals bring jobs and can create opportunities for local suppliers. The Strategic Innovation Fund has promised $1.2-billion in grants to four auto companies—Ford, General Motors, Stellantis and Honda—so that they will keep plants operating and their jobs in Canada and convert to electric vehicle and related technologies. They will also benefit from investment tax credits and low tax rates on their resulting profits as well. We have yet to learn the numbers, but LG Energy Systems and Stellantis, with plans for a $5-billion battery plant in Windsor, and Volkswagen, with plans for a similar large battery plant in nearby St. Thomas, would not be here without significant funding from the Strategic Innovation Fund. Much of the advanced manufacturing production technology, and software and key components of the batteries themselves are almost certain to be imported. But what is the government doing to ensure there is Canadian content in the form of proprietary advanced technologies so that we can build Canadian companies? In the days of Lester Pearson and Pierre Trudeau, there were fierce debates between Liberals who were nationalists, concerned about Canadian independence and the continentalists, who wanted closer integration with the U.S. It now appears Liberals don’t care for debate and, as with Freeland and her colleagues, have become eager continentalists. But we will pay a price sometime in the future. Budget 2023 won’t get us to where we should want to be. David Crane can be reached at crane@interlog.com. The Hill Times

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Freeland promises Canada will ‘build big things here,’ but will we really?

Who actually will own the new, big things to be built in Canada? Whose big new ideas will be used? Who will profit from the big, new opportunities? Will Canadians be more than employees of foreign multinationals?

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